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Endrawes v. Safeco Insurance Co.

United States District Court, M.D. Tennessee, Nashville Division

October 23, 2017

HANAN ENDRAWES and SHENOUDA HENIN, Plaintiffs
v.
SAFECO INSURANCE CO., Defendant

          MEMORANDUM AND ORDER

          ALETA A. TRAUGER, UNITED STATES DISTRICT JUDGE

         Pending before the court are Plaintiffs' Motion to Alter or Amend the Judgment to Dismiss and for Leave to Amend Complaint (Docket No. 21), Defendant's Response in Opposition (Docket No. 23), and Plaintiffs' Reply (Docket No. 27). For the reasons stated herein, Plaintiffs' Motion to Alter or Amend is GRANTED in limited part, simply to clarify the court's denial of the Motion to Remand, and DENIED in all other respects. Plaintiffs' Motion for Leave to Amend Complaint is DENIED.

         By Order dated August 25, 2017, the court granted Defendant's Motion to Dismiss this case and denied Plaintiffs' Motion to Remand the case to state court. Docket No. 19. Plaintiffs now ask the court to vacate that Order, to find that the court has no subject matter jurisdiction over this action, and to remand the case to state court. Alternatively, Plaintiffs seek leave to amend their complaint.

         MOTION TO ALTER OR AMEND

         The Court may grant a Rule 59(e) motion to alter or amend if there is (1) a clear error of law; (2) newly discovered evidence; (3) an intervening change in controlling law; or (4) a need to prevent manifest injustice. Intera Corp. v. Henderson, 428 F.3d 605, 620 (6th Cir. 2005).

         Motion to Remand

         Plaintiffs argue that the court should have granted Plaintiffs' Motion to Remand for lack of subject-matter jurisdiction. In their Motion to Remand this case to state court, Plaintiffs asserted that the action was improperly removed to federal court because it did not satisfy the amount required for federal diversity jurisdiction. Plaintiffs contend that the court should have granted the Motion to Remand for lack of subject matter jurisdiction first, before proceeding to the Motion to Dismiss.

         The court's prior Memorandum could have explained more clearly why Plaintiffs' Motion to Remand would be denied, [1] but denial of that motion was not incorrect. In their Complaint, Plaintiffs sought compensatory damages for personal injury, breach of contract, and negligent infliction of emotional distress, plus statutory damages for bad faith, plus treble damages for unfair and deceptive acts under the Tennessee Consumer Protection Act (“TCPA”). Plaintiffs claimed damages for medical expenses, past and future; physical pain, past and future; mental, emotional suffering and grief, past and future; loss of enjoyment of life, past and future; permanent impairment and partial disability; lost wages and lost earning capacity; loss of consortium; and severe emotional distress. Docket No. 1-1.

         Plaintiffs placed no specific monetary amount or limit on the damages they sought, and they did not disclaim any damages over $75, 000. Plaintiffs could have pled to avoid federal jurisdiction, but they did not.[2] Defendant's Notice of Removal stated that the amount in controversy in this action exceeded $75, 000, the amount required for this court to have diversity jurisdiction. Docket No. 1. A federal district court has original jurisdiction over any civil action where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and the matter is between citizens of different states. 28 U.S.C. § 1132(a).

         In their Motion to Remand, Plaintiffs argued that the amount in controversy did not exceed $75, 000. Plaintiffs attempted to explain that the policy limits they sought under the insurance policy at issue were $50, 000;[3] that the claim for statutory damages should not be included in the calculation because Defendant argued that claim should be dismissed; and that the treble damages sought under the TCPA, likewise, should not be included in the calculation because Defendant also argued that claim should be dismissed. Docket No. 12.

         The determination of federal jurisdiction in a diversity case is made at the time of removal. Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000); Anderson v. Mid-Continent Aircraft Corp., 2015 WL 13188357 at * 1 (W.D. Tenn. April 6, 2015). Therefore, the court looks to whether the action was properly removed in the first place. Rogers, 230 F.3d at 871-72. The determination of removability is at the time that the complaint is filed, not when Plaintiffs recharacterize the value of their claims to support their motion to remand. Homoki v. Rivers Edge Tree Stands, 2012 WL 6631043 at * 2 (N.D. Ohio Dec. 19, 2012).

         At the time of removal in this case, Plaintiffs sought not only compensatory damages, but also statutory and treble damages. At the time of removal, Plaintiffs sought the policy limits, money for past and future damages, and additional damages for the alleged bad faith and deceptive practices.[4] Moreover, at the time of removal, Plaintiffs' own valuation of the case, and the amount Plaintiffs had demanded from Defendant for these claims, was $100, 000. Docket No. 1-3. Although a demand letter is not competent evidence to prove or disprove the validity or amount of a disputed claim, the court may consider it for “another purpose, ” Fed.R.Evid. 408(b), such as inquiring into whether the jurisdictional threshold of the amount in controversy has been met. Griffith v. Aleman, 2016 WL 2869794 at * 3 (W.D. Tenn. May 17, 2016); Homoki, 2012 WL 6631042 at * 2-3.

         Defendant's later challenge to the statutory and treble damages does not change the fact that those damages were sought at the time of removal. Diversity jurisdiction is determined by the amount in controversy, not whether Defendant believes the claims to have merit. As noted in Homoki, “Adopting Plaintiffs' argument would destroy all instances of diversity jurisdiction, for it is the rare defendant who admits the veracity of his opponent's claim.” Homoki, 2012 WL 6631042 at * 3. Likewise, the fact that Defendant did not offer to settle this matter for the full amount Plaintiff sought has no bearing on the amount in controversy exceeded $75, 000. Id.[5]

         For the reasons stated herein, the Motion to Remand was correctly denied. The court finds that its prior Order and Memorandum should ...


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